German software giant SAP ( SAP) surprised Wall Street earlier in the month with a warning that it would not meet fourth-quarter revenue targets . On Wednesday, the company announced another surprise when reporting its fourth-quarter results: It will sacrifice a point of operating margin to bolster its efforts in the small- and medium-business market. The latest news didn't please Wall Street. In recent trading shares were off $3.37, or 6.7%, to $46.70. Since the warning on Jan. 11, the stock has lost about 16% of its value. SAP will spend 300 million euros to 400 million euros over the next eight quarters to develop an application suite targeted at businesses with 100 to 500 employees. The money will go to R&D, marketing and sales and should start paying off in early 2008, says Bill McDermott, CEO of SAP Americas. "This market is wide open. We believe the new suite will generate $1 billion in revenue by 2010," he said during an interview. As a result, the company expects full-year operating margin for 2007 to be between 26% and 27%, compared with last year's 27.3%. SAP is locked in a ferocious battle with Oracle ( ORCL) in the business application software market. The two companies routinely take shots at each other during conference calls, and McDermott claimed that SAP gained at least 3 points of market share in the last calendar year -- a contention Oracle disputes.